Talabat's parent company Delivery Hero raises $1.5bn in convertible bond sale

Proceeds will be used for general corporate purposes and to capitalise on attractive investment opportunities

Delivery Hero, the German parent company of food delivery service Talabat, raised €1.25 billion ($1.5bn) from an offering of notes convertible into shares, marking the company’s third equity-linked issuance in less than two years.

The company sold €750 million of notes maturing in 2026 and €500m of 2029 securities, according to terms seen by Bloomberg. Proceeds will be used for general corporate purposes and to “take advantage of attractive investment opportunities that may arise”, the company said.

Eager to lock in cheap financing from investors before bond yields rise further, companies have piled into the equity-linked market this year, with a blockbuster $16bn raised across Europe, the Middle East and Africa. Delivery Hero’s offering is one of the biggest in Europe this year.

Delivery Hero may spend the money on operating or capital expenses, or on acquisitions, Giles Thorne, an analyst at Jefferies, wrote in a note.

“Today’s raise promises the near term will be remain busy,” he said. The company has been “masterful” in using its rising stock price to match competitors’ capitalisation, he said.

Delivery Hero shares fell 2.6 per cent to €128.40 at 9:12am in Frankfurt.

The Berlin-based company tapped the market in January and July last year, raising more than €3bn across the two fundraising rounds. A company spokesman declined further comment on Thursday’s issue.

The company is spending on acquisitions and plans to grow as customers continue ordering food and grocery deliveries even as lockdowns end.

Chief executive Niklas Oestberg has suggested a possible expansion in Germany would impact profitability and the company also may take a stake in grocery delivery start-up Gorillas Technologies GmbH, according to manager Magazin.

(FILES) This file photo taken on June 27, 2017 shows a logo in a lounge area of the global headquarters of online food ordering and delivery giant Delivery Hero in Berlin. German takeaway giant Delivery Hero on December 13, 2019 said it had agreed to buy South Korea's largest food delivery app Woowa in a 3.6 billion euro ($4 billion) deal aimed at beefing up its presence in Asia. / AFP / John MACDOUGALL

Last month, Delivery Hero increased its full-year guidance for product sales on its platform after orders rose to a record in the second quarter. It also disclosed the purchase of a 5.1 per cent stake in Deliveroo.

The 2026 notes will pay a coupon of one per cent annually, while the 2029 tranche will pay 2.125 per cent. Both are being sold with a conversion premium of 40 per cent.

Morgan Stanley, JPMorgan Chase, UniCredit and HSBC Holdings ran the sale.

Updated: September 3rd 2021, 8:34 AM
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